Thursday, October 31, 1996

The crown prince at the House of Rothschild

Anne-Elisabeth Moutet profiles banker David de Rothschild as he moves to take the reins of the family's British merchant bank.

The European, 31 October 1996

Few French banking insiders are surprised by the announcement that David de Rothschild, head of the Paris-based Rothschild & Compagnie Banque, is to be brought even closer to the heart of the London-based N M Rothschild & Sons.

He was appointed by his cousin Sir Evelyn Rothschild as head of the global committee to co-ordinate Rothschild investment banking around the world, confirming him as Sir Evelyn's heir apparent, four years after he had been made deputy chairman of N 11/21 Rothschild.

Under David, 54, son of Baron Guy de Rothschild, head of the French branch of the family, Rothschild & Compagnie Banque had established itself as France's second most active investment bank, behind the legendary Lazard Freres - a respectable result for an operation created from scratch 12 years ago.

When the French Socialists nationalised the old Banque Rothschild in 1982, together with the rest of the French banking system, Baron Guy was outraged to be turned out of the family business - and the legendary building his ancestors had worked from for over a century on Rue Laffitte, employing such bright young men as Georges Pompidou, the former French president.

He was leaving France for good, he vowed in a famous Le Monde article, in which he thundered: "I was a Jew under Petain, now I'm a pariah under Mitterrand. I've had enough!"

Barely two years later, he and his son David were back, using the Ffr400 million ($77m) compensation they had been paid at the time of the nationalisation to set up a small investment bank under the name Paris-Orleans Finance. Two years later, under the first collaboration between then prime minister Jacques Chirac and President Mitterrand, they were allowed to use their own name again, and the name was changed back to Rothschild & Compagnie.

By then it was obvious that the nationalisation had proved a thinly disguised blessing.

Nationalisation compensations had been calculated on the share price over a five-year period, which usually produced much higher valuations that the 1982 bear market price. Rothschilds were rid of an inefficient, overstaffed retail banking network.

By 1987, David de Rothschild was luring to his company such whizzkids as Jean-Charles Naouri, former chief of staff of minister Pierre Beregovoy, and the man widely credited for the Paris Bourse "small bang" and the complete opening up of French financial markets. Naouri almost immediately created his own, Rothschild-backed investment fund, Euris, which is now valued at more than Ffr10bn.

In 1989 David poached Jean-Claude Meyer from Lazards: year and a half later, Meyer closed the Ffr23bn deal in which Philip Morris acquired Jacobs Suchard.

A subsequent uneasy, truce between Lazards & Rothschild was ended in 1994 when the Rothschilds hired Christian de Labriffe, a Lazards partner. In the meantime, Rothschild & Cie had hired Wasserstein-Perella' s international celebrity Yves-André Istel, in 1992, as vice chairman in charge of development of the United States branch, Rothschild Inc; and offered jobs to Gerard Worms, the former chairman of Compagnie de Suez, and to Nicolas Bazire, former chief of staff of Edouard Balladur, who had become prime minister.

For the past six years, the bank has proven one of the main players on the French and international scene. It advised Trust House Forte in its winning bid for Meridien Hotels against Accor, counselled by Lazards. It was the French, government's adviser in the privatisation of Renault and Thomson. It also advised Lyonnaise des Eaux when it acquired Northumbrian Water and sold PFG.

The bank's latest recruits have pulled their weight: Worms was instrumental in the rapprochement between Credit Communal de Belgique, while Bazire oversaw the setting up of a strategic alliance between Compagnie Generale des Eaux and British Telecom.

Rothschild & Cie employs 160 people whereas NM Rothschild's City teams number 600. The group employs 2,200 people worldwide wide. This helps explain the policy for both independent houses to work together "whenever possible".

A degree of specialisation has also taken place: London tends to do telecoms and natural resources, while Paris makes agribusiness and food a speciality. But mostly the French bank, following its London cousin's tradition, has become an expert at privatisations.

Rothschild & Cie's progress comes at a time when its older rival and neighbour Lazard Freres is suffering from transformation pains. Lazard's "elephants", Antoine Bernheim, Bruno Roger and Jean Claude Haas, all pushing 70, are said to be unhappy with the promotion of Michel David-Weill's brash son-in-law, Edouard Stern, 41, as heir-apparent, and with Stern more adventurous strategies. This explains the recent haemorrhage of younger partners.

Younger French Rothschild family members have been painlessly eased into Rothschild & Cie: Edouard de Rothschild, David's half-brother, is a full partner while their stepbrother Philippe de Nicolay works in the asset management department.

Eric de Rothschild, their cousin. son of Baron Guy's late brother Alain, who until now was in charge of the family's Bordeaux wine, Chateau Lafite-Rothschild, has also joined the bank. Although there are so far no expectations of seeing Swiss-based cousin Edmond de Rothschild's Compagnie Financière Edmond de Rothschild join the family group at this stage, Edmond's son Benjamin might come and work for Rothschild & Cie, say bank insiders.

The suicide this summer in Paris of Amschel Rothschild, 41, son of Victor and brother of Jacob, who was in charge of Rothschild Asset Management, rocked the bank. Amschel had just attended a normal working lunch with the Paris asset management team.

That evening he walked back from the bank's Rue Rabelais's offices to his hotel, the Bristol, and hung himself with his bathrobe belt from a towel rack in the bathroom. He had been, friends said later, depressed.

Paris Rothschild sources were quick to dismiss rumours that he had been shattered by the prospect of being elbowed out of Sir Evelyn' s succession by David.

"Amschel just wasn't terribly good at what he did, and he'd known it for years," one source said. "David had been made vice-chairman four years ago. This was no longer an issue."

Certainly David's latest promotion confirms his position as the anointed Rothschild crown prince. "Evelyn is still going strong at 64," insiders protest. "And he has children in their teens. They will inherit ultimately, there's no doubt about that."

But it is the French cousin who may find himself steering the House of Rothschild, more united than at any time for the be part of a century, into the new millennium.

© Anne-Elisabeth Moutet, 1996

Tuesday, August 27, 1996

The LBO Artist As Movie Star: Reinventing Bernard Tapie

Filmmaker Claude Lelouch Reinvents Bernard Tapie: from business tycoon to movie star, writes Anne-Elisabeth Moutet

The European, 27 August 1996.

In one of the early shots of Claude Lelouch's new film, Hommes, Femmes: Mode d'Emploi ("Men, Women: Instructions for Use") starring Bernard Tapie, the 53-year-old bankrupt businessman, Eighties icon and ex-minister of François Mitterrand, the camera glides past a Crédit Lyonnais branch on Place de l'Opéra. This triggers some nervous giggles in the audience. Crédit Lyonnais is of course the bank that financed Bernard Tapie's wildest business ventures throughout the Eighties, and, being still owed 1.3 billion francs, forced him into bankruptcy a year and a half ago.

Asked about the shot, Claude Lelouch claims he didn't even notice the Crédit Lyonnais sign while filming. Neither did he plan a subtle reference to Bernard Tapie's tax-dodging shell company for his corporate jets (and his yacht), which resulted in an 18-month prison sentence currently under appeal ­ one of several ­ when he shows Benoît Blanc, the fictional character played by Tapie, flying his own helicopter inscribed "Air Blanc".

One is inclined to believe Lelouch, if only because movieland is a vastly different world from the financial and political one inhabited until now by Bernard Tapie. In the latter, people know all about the companies Tapie bought (Wonder, Look, Terraillon, Testut, Adidas), the bankers who gave him unlimited credit (Pierre Despessailles of SdBO, Jean-Yves Haberer of Crédit Lyonnais), the judges who have charged him with corruption, tax evasion, misappropriation of company funds, intimidating witnesses (Eric de Montgolfier, Eva Joly, Thierry Philipon), the politicians who supported his meteoric career (François Mitterrand et al.)

It's an impressive cast list, with intricate ramifications and hundreds of episodes. Tapie's own life isn't a two-hour feature film, it's an Aaron Spelling series spread over the years, and true addicts in Paris know every little plot turn.

But Claude Lelouch, who has clocked some 30 movies since his famous A Man And A Woman, churning out at least one a year, isn't that kind of an addict. Twenty-seven years ago, he came across the young Bernard Tapie, who had taken to rent his screening room every Thursday night not to show pictures but to give motivational sales talks. He was, Lelouch recalls, "riveted" ­ and asked Tapie if he had considered acting. The former car salesman and budding business leader, who five years earlier had cut three singles in an attempt to break into the pop music scene, answered he wasn't interested. In 1972 Lelouch followed up on his instinct and called Tapie, offering him a part in L'Aventure, c'est l'aventure, opposite Jacques Brel and Lino Ventura. He didn't have time, Tapie said.

Lelouch called again ten years ago, in the middle of the go-go Eighties, when Tapie had become a star on the Bourse, in the evening news, as chairman of Olympique de Marseille football club. His latest project was a monthly TV programme entitled Ambitions, in which he interviewed, in front of a studio audience, young people who had plans to set up a business, and solicited phone-in financing pledges. He was proving a first rate television personality. "I told him I didn't know whether, in ten years' time, he would sit in the Elysée Palace or in jail, but both would be interesting to watch ­ would he let me follow him around with a camera for a documentary?"

Still Tapie turned Lelouch down. But when, last year, having been declared bankrupt, his house and his furniture repossessed, threatened with expulsion from his seat in the Assemblée Nationale and jail, he received yet another telephone call from Claude Lelouch, he knew the filmmaker was in earnest, not trying to score easy publicity points. "He was in the pits," Lelouch recalls. "Nobody else was calling ­ apart from his lawyers. He said yes."

"We knew perfectly well it would be no use making me an idealist hero, a knight in shining armour," Tapie says. "Nobody would have believed it. So Claude chose the only option ­ he made me into an even worse bastard than expected."

This is disingenuous. Benoît Blanc, the shady, high-powered lawyer whom Tapie portrays in the film, is fallible but engaging, capable of great charm (like Tapie) and vulnerability (much less like Tapie), a persuasive talker (like Tapie) who can argue about religion and philosophy quoting Pascal or St Augustine (totally out of character). Tapie's quick, instinctive intelligence is there, but not his essential brutality and ruthlessness. "I was not interested in these aspects of his personality", Claude Lelouch told me, a little wary. "You have to remember this is a fiction film. Benoît Blanc is not Bernard Tapie. He is a character I wrote up, and then offered to Bernard because I thought he would be ideal. If he'd turned me down I would have offered the part to Jean Yanne."

It should be said at this stage that Hommes, femmes, mode d'emploi is a very good movie, and that Bernard Tapie is a brilliant actor in it, unexpectedly understated: but then the entire cast is superlative, from Fabrice Luchini, who plays a plainclothes cop whom Tapie befriends in a hospital waiting roomwhen both have to undergo tests for stomach cancer, to Anouk Aimée as a charming black-crepe-wreathed confidence trickster working Paris cemeteries in search of rich widowers. Lelouch has been known to be uneven, but this is one of his best efforts ­ a wistful fable about playacting on stage and in life, about human relationships and death.

To a French viewer, the sub-text of Tapie's personal history adds obvious depth to his character. (It's probable some of the on-screen coincidences came unconsciously to Lelouch.) But Tapie's performance is such that Gillo Pontecorvo insisted that the film should open the Mostra at Venice next week, asking Lelouch "Who is this new actor you have cast? He is remarkable." Now there is talk of two parts being offered in America (including one, possibly, as Che Guevara), and although Tapie isn't talking, he admits that he has been brushing up on his English. "There's a strong buzz about him," Lelouch confirms. "People in Hollywood have their ears to the ground. Bernard has a serious career ahead of him."

To dedicated Tapie-watchers, there are strange similarities with Bernard Tapie's previous incarnations. Whenever he bought up a new company or started in a new enterprise, he was, he assured the audiences that invariably flocked to see him, a changed man. When he ran for the House, in 1988, he said he would put all his businesses into a blind trust. (He didn't.) When he acquired Adidas in 1990, he swore it was the culmination of his career, that he would run it for decades (He flogged it off two years later.) Earlier he variously vowed he would devote his entire energies to cycling (he sponsored a team including Greg LeMond and Bernard Hinault in the Tour de France for three seasons), to football (he bought Olympique de Marseille in 1986 and sold it in 1993). Even Lelouch had a few private butterflies before he started: he shot the 53-million-franc film in 39 days last winter, having worked out a supertight schedule "because I couldn't be sure Tapie's interest in the whole exercise wouldn't flag. But it didn't. He never came late, not even once, and he always knew his lines."

"Can cinema save Tapie?" asked the headline on the cover of thre newsmagazine L'Express last week. The answer, roughly, is "no". On the day the movie was released, Tapie formally resigned from his seat of Député, explaining in radio interviews that he couldn't lead a political and an acting careers at the same time. This had been nicely timed to ensure additional media coverage for Lelouch's film. It was also untrue: Tapie jumped because he was about to be pushed ­ in a matter of days rather than weeks. He has already been given separate suspended jail sentences adding up to over eight years, only part of which are suspended; these, together with his bankruptcy, make him uneligible for elected office; he isn't even allowed to vote anymore. He hasn't given up his EuroMP seat, however ­ the invalidation procedure there is much more arduous, and Tapie needs the job and the 70,000 francs a month pay, his only source of income these days. "Brussels is different," he says unconvincingly. "You don't have to give up your professional activity to be a MEP." But soon, when all the appeals have run out, Tapie will in all probability have to do time ­ one or two years at the very least. It is, say intimates, a perspective that terrifies him.

Bernard Tapie was born in 1943 in North Paris, in a working-class family, and grew up in Le Bourget. He doesn't even have his baccalauréat (although he has at times to have an electrical engineering degree). But at school, at the army or on a hadball field, he was from the start the boy around whom all the others clustered. After the army he worked as a car salesman, then started a business selling TV sets. From this (and after his brief attempt to become the next Johnny Hallyday, under the name Bernard Tapy) he graduated to creating a commercial consumers' association that obtained discounts in big stores for its members.

He had a partner there; he left under a cloud. More can't legally be printed: Bernard Tapie, until two years ago, had a clean criminal record; it is actionable under French law to mention whatever got amnestied in the past. There followed an unsuccessful attempt to create an emergency heart disease ambulance service; then a first buy-out of an ailing newsprint company, the harbinger of countless LBOs throughout the Eighties. But Tapie first impinged upon the national consciousness in 1979, when he announced grandly he would buy up the castles belonging to the deposed Central African "emperor", Jean-Bedel Bokassa. The deal eventually fell through, but Tapie became a star, getting his first taste of being interviewed by every television channel.

He had vowed he would become an industrialist. What he really became was an asset-stripper. His technique was always the same - he'd buys up a practically bankrupt company for one symbolic franc, file a winding-up petition, then got the receivers to agree to a 12- to 24-month freeze of all its debts. Next came ruthless downsizing, while Tapie convinced hard-pressed creditors to let him buy back the company's debts for a small fraction of their face value ­ between 10% and 30%. Publicity he took care of himself. Usually management and employees at first welcomed this forthright, smiling, charismatic character who swooped down upon them flying his own plane, haranguing them on the shop floors, vowing that he'd make the company great again. But Tapie's problem is that he is no industrial strategist ­ and he can't resist a quick franc. The plane costs were billed to the companies he visited, for instance. New products were long in coming. He announced profits when there were none.

In the mid-Eighties it was impossible to miss Tapie in the media. He had his own TV programme. He said he would start "no-nonsense" business schools designed to train good salespeople. He bought an 18th century townhouse in the grand Faubourg Saint-Germain from the couturier Hubert de Givenchy, and said he was filling it with priceless antiques. (When they were seized by Crédit Lyonnais two years ago, it turned out many were fakes.) He sailed the biggest yacht in France, the Phocéa. He gobbled up companies with proud old names, such as the 84-year-old Madame Grès's couture house. And thoughout, he was bankrolled by SdBO (Société de Banque Occidentale), a Crédit Lyonnais subsidiary, with gay abandon.

Tapie says today many more people share the responsibility for Crédit Lyonnais's appalling losses (estimated at some 100 billion francs) ­ but he's the only one whose name comes back again and again: the establishment figures get away with it. He has a point: a former Crédit Lyonnais chairman, Jean-Maxime Lévêque, for instance, whose own small private bank, IBI, was bought out by the Lyonnais, lost them 8 billion francs, 6 times as much as Tapie. Yet the man in the street doesn't know Lévêque's name. But this is a poor excuse ­ and it doesn't start to cover such convictions as corrupting players from the Valenciennes football team to throw their match against Olympique de Marseille, or Tapie's numerous tax dodges.

Still, when he acts in a film, Tapie doesn't cheat anyone. All he is contracted to do is there to see on the screen; there are no disappointments, no funny surprises. Rather than being paid up front for Hommes, Femmes, Mode d'Emploi, he has decided to get a percentage of the box-office results: after the first 35,000 tickets are sold, he is to receive 2.85F on each ticket price. (That way the money won't be confiscated too soon by the Lyonnais). If the movie does well, he stands to make several million francs. As it is, his letterbox is filling with scripts every morning.

© Anne-Elisabeth Moutet, 27 August 1996

Thursday, March 28, 1996

Credit Lyonnais bought a studio but loses script

Anne-Elisabeth Moutet looks at the hubris of a French bank that overreached itself

The European, 28 March 1996

THE persistent rumour in Paris is that Jean Peyrelevade, the chairman of Credit Lyonnais, is seriously thinking of jumping ship and joining Lazard Freres as a senior partner. It surprises no one.

Until a year ago, his bank was commonly known as "Discredit Lyonnais" , and it sometimes seemed as though there was no loss-making venture in Europe in which Credit Lyonnais was not involved. However, Peyrelevade was recently able to announce that the bank was in the black for the first time since 1991; although he was not expecting wild praise, he did hope for some modest kudos.

The bank posted token 1995 profits of Ffr13 million ($2.5m) for an overall gross banking income of Ffr43 billion - the latter down by five per cent from last year. Provisions still stood at almost Ffr6bn, encouragingly down from Ffr14bn last year. Overheads were down by 3.4 per cent.

But few French analysts or fellow-bankers were in anything but a scathing mood, pointing out that even after the biggest bail-out in French banking history, estimated at Ffr45bn by the European Commission when it gave it a reluctant go-ahead, 1996 projections were so sombre that it was unlikely that Credit Lyonnais would stay in the black.

Peyrelevade forecast that the fall in French interest rates would cost Credit Lyonnais an additional Ffr1bn to finance its loan to CDR (Consortium de Realisation), the state-backed body established last year to administer much of its debt.

Privately, most Parisian experts believe the cost of this loan will be closer to Ffr2bn. CDR borrowed Ffr145bn from Credit Lyonnais at a variable rate, while Credit Lyonnais refinanced it at a fixed rate on the markets.

THE Credit Lyonnais saga has occupied, and fascinated, the French political and banking scene for almost five years, although measures to contain what may eventually amount to a Ffr100bn catastrophe started only on 10 November 1993, when Jean-Yves Haberer, the bank's chairman since 1988 and the main architect of its all-out expansion, was finally sacked by Edouard Balladur's government. In the meantime, the bank had posted Ffr1.8bn losses in 1992, and was about to announce Ffr6.9bn losses for 1993.

That Haberer stayed so long in office has everything to do with the French system of governance of stateowned enterprises. Credit Lyonnais' boss, like his France Telecom or Thomson counterparts, is appointed by the Cabinet, and usually plucked from the small, incestuous ranks of the upper French civil service, bred in elite schools, mostly ENA (Ecole Nationale d'Administration, Haberer's alma mater); and sometimes Ecole Polytechnique. As the losses mounted and the scandals surfaced -- bankrupt Credit Lyonnais creditors from Robert Maxwell to Giancarlo Parretti made world headlines -- it was distasteful for ministers who had themselves graduated from the same exclusive establishments to throw a colleague to the dogs.

Haberer belonged to ENA's creme de la creme, the Inspection des Finances, a state body that creams off only the five best out of each 120-strong ENA class annually. He had then headed the French Treasury during the presidency of another Inspecteur des Finances, Valery Giscard d'Estaing, before branching out into the private sector and chairing Paribas. Cross the Inspection des Finances with the senior ranks of the Treasury's alumni, and you find a list of a couple hundred men -- and few women -- who are the most powerful figures of France.

Haberer's fantastic ambitions for Credit Lyonnais become clear from a list of its major fiascos. In 1990 it financed, to the tune of $1.3bn, Giancarlo Parretti's takeover of MGM studios, through its Dutch subsidiary Credit Lyonnais Bank Nederland. During the 1994 National Assembly parliamentary inquiry hearings into Credit Lyonnais, it emerged the decision to go ahead with the MGM deal was taken in half an hour by the Credit Lyonnais executive in charge of foreign subsidiaries, Georges Vigon.

Vigon, who had not even consulted his direct boss, Alexis Wolkenstein, had previously been forbidden by Haberer in writing to grant any new loans to Parretti. But this did not prevent him from stepping in after Time-Warner withdrew from a similar deal a few hours before the projected closing. Episodes like this were common under Haberer.

Such was the bank's gung-ho culture at the time that Vigon was congratulated rather than sacked. Parretti has since been declared bankrupt by American courts, while his Credit Lyonnais-financed partner, Fiorino. Fiorini's Swiss company SASEA, now insolvent, is the object of a Swiss judicial inquiry. Credit Lyonnais still owns the loss-making MGM, which it has unsuccessfully tried to sell off ever since.

In 1990 Credit Lyonnais also bought, for Ffr250m, a controlling interest in the indebted International Bankers bank from its owner, Jean-Maxime Leveque, another Inspecteur des Finances and Haberer's predecessor as Credit Lyonnais chairman. A flamboyant right-wing establishment figure, Leveque, having chaired French bank CCF before its 1982 nationalisation, fancied himself a banker; and it would have been bad form for a fellow inspecteur to deny him. Not only did International Bankers specialise in risky property financing it turned out that several of its top executives had been receiving illegal commissions to extend loans. International Bankers is now in receivership, with few of its Ffr8bn debts expected to be recovered.

Since 1977 the maverick businessman, politician, film actor, and football impresario Bernard Tapie had enjoyed a special relationship with SdBO (Societe de Banque Occidentale), a wholly owned Credit Lyonnais subsidiary specialising in financing buyouts of bankrupt companies.

BASICALLY an asset-stripper, Tapie outreached himself with the buyout of Adidas in 1990, which Credit Lyonnais forced him to sell two years later to a consortium headed by former Saatchi & Saatchi chief Robert Louis-Dreyfus for Ffr1.6bn, as his outstanding debt to SdBO stood close to Ffr2bn.

Since Peyrelevade's arrival, the Tapie affair has degenerated into a blood feud. Peyrelevade, a born Marseillais of modest origins, resents Tapie's political ambitions in Marseille as well as his flamboyant, Credit Lyonnais financed lifestyle. He ordered that Tapie's 18th- century town-house and antique furniture be publicly repossessed in the summer of 1994.

Tapie is suing Credit Lyonnais. He claims that he was forced to sell at a loss; Adidas was successfully floated on the Frankfurt stock exchange last year, and stands at a Ffr11bn market capitalisation.

Credit Lyonnais' nose for a bad loan was unrivalled; its poor customers include Eurotunnel and the developers of Canary Wharf, Novalliance venture capital and the Jacques Fath couture house. If Credit Lyonnais was not top of the list of French banks hit by the property crisis, it is partly because losses sustained by other banks were even better publicised. In fact, the Lyonnais shared the property disaster, mostly with the developer Michel Pelege.

Pelege, like La Défense developer Christian Pellerin, is still afloat -- entirely propped by Credit Lyonnais, which feels it would stand to lose more in bankruptcy proceedings. SdBO is stuck with an unsaleable property portfolio -- the "assets" unsuccessfully stripped by its stable of dubious 1980s turnaround specialists, such as the disreputable Pascal Jeandet, who was bankrupt when he died two years ago, costing SdBO Ffr1bn.

The European Commission gave its agreement to the government bail out on condition that Credit Lyonnais sold 35 per cent of its foreign banking network. This leaves Credit Lyonnais with a reduced income basis at a time when even sound banks find it hard to make money in commercial activities. Haberer's ambitions of creating a German-style universal bank are dead: Credit Lyonnais has also been forced to shed most of its industrial portfolio.

Reduced to the state of a chronically unprofitable rump, Credit Lyonnais is short of expectations, and bereft of hope. It is hard to fault Peyrelevade for thinking of jumping ship.

© The European & Anne-Elisabeth Moutet, 1996

Wednesday, January 10, 1996

François Mitterrand - a personal memoir

What was it like meeting the former French president, who died last Monday? Our Paris Bureau Chief followed his career for 15 years and remembers.

On the first day that they learned of François Mitterrand's death, Parisians couldn't quite decide where to go and pay their last respects. At first people streamed to 22, rue de Bièvre, the narrow Fifth Arrondissement lane just on the south side of the Seine from Notre Dame, where the president had owned a house since the mid-70s: during the 14 years of his reign, rue de Bièvre had been increasingly restricted, then closed off to cars and passers-by, until iron gates had actually been erected at each end of the street, guarded 24 hours a day by police.

And yet those in the know - many people, as it turned out - chose to take their red roses and their private or political grief to another part of Paris, still on the Left bank, but in the infinitely more bourgeois surroundings of the Champ-de-Mars next to the Eiffel Tower, 9, rue Frédéric-Le Play, where the ex-president, it was officially known, had his "offices" after he left the Élysée last 17 May 1995. In fact the 450-square-meter flat loaned by the State was both office and home to Mitterrand, where he slept and entertained his longtime mistress Anne Pingeot and their 20-year-old daughter Mazarine.

Mitterrand died on the morning of Monday 8 January: he had been very weak for several weeks that had included a last trip to his beloved Upper Nile at Aswan, with Mazarine and Mrs. Pingeot, in mid-December, then proper Christmas celebrations at his Latche country home with his wife of 51 years, Danielle, their two sons Gilbert and Jean-Christophe, their grand-children and close friends. He woke up around 7:00 am, his doctor Jean-Pierre Tarot reported, said that he was very tired, and would try to get some more sleep. From that sleep he never awoke.

For a few hours the fiction that Mitterrand had died "at his desk" was maintained. TV crews were sent to interview passers-by, local shopkeepers and mourners to both rue de Bièvre and rue Frederic Le Play. This duplicate commemoration was in a way emblematic of François Mitterrand's entire life, spent on both sides of the political divide, of arguments, of policies, of families and friends, and ultimately of history.

This is why it is so difficult for anyone who crossed his path, even without being completely engulfed by his powerful personal charm - which he wielded with consummate artistry - to think back of him with anything approaching objectivity. I met François Mitterrand about half a dozen times between 1980 and 1994; before that, as a history student and a sometime member of the Jeunesses Socialistes, I hawked the Programme Commun, which he had drawn up to rebuild the Left in 1972, with complete conviction.

I would like to be able to say that at the time, aged 17, but coming from a family with deep-rooted Socialist traditions - my grand-father was a co-founder, with Jean Jaurès, of the SFIO, the ancestor of the Socialist party, in 1905, and later served as a minister in Leon Blum's Popular Front Cabinet - I had understood Mitterrand's cunning strategy to circumscribe and enfeeble the strong, neo-Stalinian French Communist party in an electoral alliance. The truth is that I bought the official line that the Communists were our friends and comrades. With longer memories, my parents - who unflinchingly voted Socialist at every possible election throughout their lives - muttered things about Kravchenko (Solzhenitsyn's "Gulag" was only published the following year) and about the 1920 Congrès de Tours (when the SFIO split between its Bolsheviks, the SFIC Communists, and its Mensheviks, the tattered remnants of the SFIO).

François Mitterrand, who himself had an extremely long and encyclopaedic memory, built his entire career on other people's forgetfulness, and on his acute instinct of how far he could blur the borders between truth and falsehood, ideal and manipulation. I first met him following his successful campaign of 1981. He had rebuilt the French Left and was about to carry it to power, a phenomenon of such magnitude in France that for the first months of Socialist rule in 1981, tens of thousands of people, not all very rich, frantically (and illegally) would be sending their money abroad rather than leave it to be appropriated by "the Reds". This panic was matched on the other side by the exhilaration of the campaign's last few weeks. From an old Fourth Republic warhorse with a few unsavoury episodes to his name - the faked assassination attempt in the Observatoire gardens in 1959, the Francisque decoration which he'd been awarded by the Vichy regime (but we all chose to believe he had had to accept it as a cover for his "Resistance work") - Mitterrand was transformed into the Left's Great White Hope.

He enjoyed it tremendously. He arrived late at practically every rally, having sometimes diverted the press pack to admire a little Romanesque church he knew in the area (he knew many), or invited some of the pundits of note (Jean Daniel of Le Nouvel Observateur, Jean Lacouture of Le Monde) to dinner at a gastronomic restaurant while the faithful were kept waiting in a state of frenzy with endless speeches by lesser figures of the party. He could do no wrong. Almost every journalist following the campaign had horror stories of Valéry Giscard d'Estaing's hauteur, aristocratic pretensions, and his staff's iron control on the press, especially TV.

French political campaigns traditionally end 24 hours before the day of the vote, "to let people make up their minds in peace". Since elections are always held on a Sunday, this meant that Mitterrand's last campaign plane trip before his election took place on Friday 7 May, 1981 - a crazy dash from Épinal to Strasbourg to Rennes, crisscrossing France in private planes the cost of which none of us yet thought of questioning. Mitterrand used to chat with reporters, and that evening, he walked down the aisle to sit next to me, asking me questions about my grandfather, whose job as Colonies Minister he had taken over in the Fifties. I was so petrified with awe that I didn't know what to answer except a few platitudes. Smiling, he switched to literature and asked me if I'd read William Styron's "Sophie's Choice". I had, I said, and thought Styron had stolen the idea from the 1967 novel by Yael Dayan (Moshe Dayan's daughter), "Death had two Sons". This was apparently the wrong thing to say: Mitterrand had loved "Sophie's Choice". He suddenly switched off the charm. I had not passed. With a few words, he was on his feet again to chat with someone else, and what I remember most was the switching off bit - the way this incredible warmth, of which I was not consciously aware, suddenly vanished, leaving me feeling an abject, stupid failure. Later I also realised how addicted one could become to that warmth.

Partly by chance, I stood less than a yard from Mitterrand at half past six on Sunday, 10 May, 1981, when, after an interminable rainy afternoon of feverish waiting in the small lounge of the Hôtel du Vieux-Morvan in his constituency of Château-Chinon, an aide made his way through the swelling crowd and touched his arm, announcing that all the polls coincided - even though the voting booths in France's larger cities would only close at 8:00 pm, he had won the prize that had eluded him for so long. He was in the middle of a typical Mitterrand pose - taking his time to explain the vagaries of the Morvan climate to a pretty girl, this time the blonde correspondent from "Stern" magazine. For at least two full minutes he went on talking as if nothing had happened, about granite hills and how the clouds from the north-west were stopped by the heights. Then he looked around and asked: "Ca y est? Ca ne peut plus changer?" A pause. "Bon. Maintenant, les ennuis commencent."

Everybody remembers the amazing celebrations of that Sunday night, the hundreds of thousands dancing in the streets on Place de la Bastille and in so many cities in France. For years the election celebrations had taken place in les beaux quartiers, Gaullists in their nice Peugeots and Citroens driving up the Champs-Elysées tooting their horns, singing the Marseillaise and waving tricolours. This time the flags were red, the cars were beat-up 2CVs and 4Ls, and the music was rock. I don't think I was quite rid of the elation of that night when I saw Mitterrand again at his inauguration, on 21 May 1981, at the Élysée Palace.

Giscard, a sore loser, had stretched the 10-day period the outgoing president is allowed to stay to its utter limit. He greeted Mitterrand on the porch, had an insultingly short 15-minute meeting with him in his first floor corner office (which Mitterrand relinquished to Jacques Attali, preferring to settle in the central study that had been De Gaulle's own office) and decided, in a textbook display of everything that was wrong about his political and psychological instincts, not to drive but to walk out into the rue du Faubourg Saint-Honoré, hoping perhaps to be applauded, or even pitied. Of course the crowd come to watch Mitterrand booed him mercilessly. We inside only saw this later on TV; we were waiting for that wonder of wonders, Mitterrand arriving at the Élysée for the first time.

Symbol was piled upon symbol. The 80-year-old Henri Cartier-Bresson, whose photographs of the first 1936 "congés payés" holidaymakers became the emblem of that era, was snapping away with his little Leica. The former Fourth Republic PM, Pierre Mendes France, the man who epitomized honesty and integrity for the entire Left, was there too: PMF was about the same age as Cartier-Bresson but a lot less sprightly - in fact his cheeks were gray and the lines on his face deeply-etched. Mitterrand, in a deliberate gesture, went directly to him when he entered the Élysée Salle des Fetes, and kissed him on both cheeks. It was said later that Mendes cried; certainly he was very moved. None of us, at the time, questioned the irony of the shortest-serving great leader of the Left - his high principles had caused him to always refuse compromise - being embraced, and, in a way trotted forward as the ideal alibi by the longest-serving politico of the Fourth Republic, who'd switched alliances and allegiances with enough brio that he took part in practically every Cabinet between 1946 and 1958.

Much later, another irony would find itself superimposed onto this dream publicity shot, when Mitterrand's Vichy past emerged - the sheer gall of his kissing the man whose luminous interview was at the centre of Marcel Ophuls's "The Sorrow and The Pity", the epoch-making documentary that opened the eyes of an entire generation to the realities of ordinary collaboration (and was banned from French TV for 14 years). In the film, Mendes had told of his being ostracised by fellow-officers in North Africa before being deported to be tried in Clermont-Ferrand by collaborationist judges, in front of a courtroom packed with Action Française goons. But we all believed, and would for quite some time, that Mitterrand had been a Résistance hero; it would be long before some of us would realise that those who vouched for his impeccable conduct (and he for theirs) were all his Angoulême school mates and Fascist-leaning law school friends of the Thirties.

Soon after the inauguration, Mitterrand organised a luncheon at the Élysée for the 20 or so reporters who'd followed his campaign regularly. The mood was light-hearted, the president was approachable and jocular, the food was excellent; under the white-and-gilt rococo panelling of the downstairs dining-room, we all, Mitterrand himself included, perhaps, still felt we were only visiting. Out of all the light, exhilarated banter I do remember the steel in him showing in two occasions, though. The new "free" FM-band radio stations were mentioned; at the time, they were not allowed to carry advertising. I argued that they should. "It's better to know where exactly the money comes from." (God I must have sounded naive.) "No," said Mitterrand, "let Radio Tour Eiffel (the Mairie de Paris, i.e. the Chirac FM station) cost them the maximum." His implacable "que çà leur coûte très cher" still rings in my ears. It was, I realised later, instructive. (The other occasion had to do with liberalising the money markets; Mitterrand and his chief of staff, later Minister for Justice Michel Vauzelle, were against it. I felt pretty silly again, although I would, later, be vindicated.)

There were other meetings later: press conferences, foreign trips, political rallies, and a long but rather disappointing interview for ELLE magazine on the eve of the 1988 campaign. Mitterrand, who was about to embark on a vote-pleasing discourse on equal rights, more or less shot down his argument in flames before he started by telling me and our photographer, as we entered his upstairs private apartments: "I'm sorry I can't offer you anything to drink, my wife isn't here." (I wanted to start my piece with the anecdote, but French ELLE vetoed it.) Still, after two years of uneasy cohabitation with Chirac, marked by a series of petty battles which the wily old Élysée householder usually won, Mitterrand looked a lot better than the Right. A few days after our interview, he gave his last campaign rally at Le Bourget, one radiantly sunny afternoon, in front of some 40,000 people, with a rousing hour-long speech in beautiful French, the barrister in him blending with echoes of great political speakers of the past. He was just way above the rest, and I duly voted or him.

And then of course it all started coming tumbling down: les affaires, the Péchiney scandal, the irresistible elevation of Bernard Tapie. Mitterrand treated them with contempt - contempt seemed to have become his overriding sentiment, together with an arrogance fueled by the courtiers gathered around him. It was as if, not having to campaign for reelection again, he had given up the seduction game - except when it pleased him. I remember the 1989 Bicentennial celebrations, and the Élysée garden-party that day, with the 10,000 or so guests trying to touch the President as if he were a faith-healer, like the people outside Versailles used to wait and be touched by the King. The mantle of Louis XIV is tempting for any French leader with hubris, and Mitterrand didn't lack it. We had a great Bastille Day party, just as we were given a great Opera, a great Pyramid, a great Arch, et caetera.

I came peripherally across the track of another, quite different François Mitterrand in 1991, while researching a story - which The European broke - on the cosmetics company L'Oréal, disclosing that it still employed a war criminal and noted collaborationist, Jacques Corrèze, as head (and key shareholder) of its American sister company, Cosmair. L'Oréal's founder Eugène Schueller had given Mitterrand a job and a salary in 1946 (as editor of the magazine "Votre Beauté"). Schueller had funded the Cagoule, a fascist group, in the Thirties, to which Robert Mitterrand, the president's brother, had belonged. He had also funded one of the nastier pro-nazi collaborationist parties during the occupation, the RNP. Robert Mitterrand married Corrèze's niece Edith. Schueller's daughter Liliane (still today the majority L'Oréal shareholder, and France's richest woman) had married a school friend of Mitterrand's, André Bettencourt, supposedly a Résistant - but it turned out he had been certified a Résistant by Mitterrand's own shadowy organisation. (Bettencourt had in fact written shrilly pétainiste articles for a German Paris-based Propagandastaffel publication during the war.)

And still it never occurred to me that Mitterrand himself was at the heart of this tangled web - I remember being reassured by a remark he made after our story broke (complete with damning Bettencourt quotes) at a small Élysée dinner-party attended by a friend. "Bettencourt made some mistakes when he was very young, but he made up for them later on in the war," the President said dismissively, and being told of this, I remember feeling reassured.

It was, of course, illusory. Even before Pierre Péan's biography disclosed Mitterrand's Vichy career in 1994, some of the President's more provocative moves came under public scrutiny. Every year, for instance, he had the local Préfet - the official representative of the Republic! - lay a wreath on Pétain's grave. During his customary 1992 Bastille Day interview, he flatly refused to acknowledged any French responsibility in the rounding up and deportation of Jews by Vichy (75,000 died). As René Bousquet, the former secretary general of the Vichy police, finally seemed about to be tried, Mitterrand took his defence in "casual" conversations with journalists - and it became obvious that they had remained friends throughout the years (Mitterrand even played a cruel joke on his chief aide of 11 years, Jacques Attali, who is Jewish, by once inviting him to lunch "with a few friends" at the restaurant Dodin Bouffant - then after the lunch telling him who exactly the perky elderly South-Western notable sitting next to him really was.) I later asked Attali how he accounted for Mitterrand's attitude and past, and he wouldn't answer - it was plain he had been and still is seduced by the president's charm and vast intelligence, but was wounded. ("Le silence est la forme ultime de la gratitude", he said with some elegance and not a little meaning recently.)

Ultimately, what I can't forgive François Mitterrand are less his youthful mistakes (although they were far more important than he let Péan on to) and certainly not his private life vagaries (though we'll be hearing in forthcoming weeks of two more illegitimate children, the youngest of whom is only 8) but the fact that towards the end of his mandate, and his life, he had become so convinced of his own powers that he tried the ultimate sleight of hand on the French people - make them accept that truth mattered little, and principles not at all. I shan't even go into the shady money dealings: the tip of that iceberg was revealed by investigative journalist Jean Montaldo, and I am equally certain that the huge amount of misappropriations by the president and his various family members will come out in a short time. This is the man who for PR purposes hijacked the funeral of his former PM Pierre Bérégovoy, an honest man goaded beyond endurance to suicide, and whose anguished telephone calls he had refused to take for several weeks.

When the Péan book came out Mitterrand gave a nauseating interview to TV pundit (and state channel chief) Jean-Pierre Elkabbach: half of it was devoted to brushing away the sins of Vichy as minor misdemeanours. Mitterrand - a law graduate! - said that as late as 1942, he wasn't aware of the "statut des Juifs", the stringent 1940 legal racial restrictions imposed on France's Jews. (He also said they applied to "foreign" Jews, a revealing slip of the tongue.) He justified his criticising of the maquis fighters among the Resistance organisations (how untidy!) The second half of the interview was devoted to long, stoic, beautifully phrased answers about his prostate cancer, designed to make him look good, noble, brave. The implications were clear: collaboration was OK because so many people were involved; while how could such a heroic character as he be criticised for anything he chose to do in his life? It was pure, unadulterated self-sanctification. He had been more or less in power (or a member of the Establishment) for over 50 years; he wrote elegant (if contrived) French; his friends were the best and the brightest of the Left bank; he practically walked on water. In front of my TV set, I simply felt sick.

There are no points awarded in France for plain honesty; and admitting to one's mistakes is laying yourself open to ridicule, to the very least. But a Socialist president elected to "Change Life" (his perhaps unrealistic campaign promise of 1981) and vowing his regime would restore "morality" - Robespierrian virtue! - to Giscard's France could have taken one or two steps in the right direction. Instead François Mitterrand elevated lying and betrayal to an art with such brilliance that if I were a believer, I would have little doubts as to where he is now - back to running that rather warm place down there. No wonder he was angry with Gorbachev for letting East Germany go.

© Copyright The European & Anne-Elisabeth Moutet 1996